|A recent surge in the cost of funds index has eased. The index has been recently impacted by historic government measures and the failure or acquisition of some of its big members.
COFI was 3.155% in November 2008, an announcement Wednesday from the Federal Home Loan Bank of San Francisco said. COFI climbed from 3.125% in October.
The monthly increase of 3 basis points during the latest month significantly eased from a jump of 36 BPS in October and reflected the historic capital-strengthening measures recently undertaken by the U.S. government. The country's banks may see a further decline in their collective cost of funds as the market further digests emergency measures recently implemented by the Department of the Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation.
COFI, which is used as an adjustable-rate mortgage index, was lower that 4.172% in November 2007.
The index was calculated based on interest expenses paid on total funds, deposit accounts, advances and other borrowings by 11th district member institutions headquartered in Arizona, California and Nevada. Average total funds used in COFI's calculation plummeted to $79.3 billion in November from $397.4 billion 12 months earlier.
Movement in the index reflected a restructuring of 11th district membership, including the acquisition of Countrywide Bank FSB by Bank of America Corp., the collapse of IndyMac Bank F.S.B. and the acquisition of Fremont Investment & Loan by CapitalSource Bank -- all which occurred in July. Also impacting the district's costs was the November failure of Downey Savings and Loan Association, F.A.
Another ARM index, the one-year Treasury yield, ended November at 0.90%, down from 1.34% at the end of October and 3.26% on Nov. 30, 2007. On Wednesday, the one-year Treasury yielded 0.37%.
The six-month London Interbank Offered Rate was 2.62% at the end of November, sinking from 3.48% a month earlier and 4.86% a year earlier, according to data reported by Bankrate.com. The yield on LIBOR ended 2008 at 1.78%.
The Mortgage Bankers Association reported that ARMs accounted for 0.8% of overall applications tracked in its Weekly Mortgage Applications Survey for the week ending Dec. 26.